Stock Analysis on Net
Stock Analysis on Net

Automatic Data Processing Inc. (NASDAQ:ADP)

This company has been moved to the archive! The financial data has not been updated since April 29, 2022.

Analysis of Goodwill and Intangible Assets

Microsoft Excel

Goodwill and Intangible Asset Disclosure

Automatic Data Processing Inc., balance sheet: goodwill and intangible assets

US$ in thousands

Microsoft Excel
Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016
Goodwill 2,338,400 2,309,400 2,323,000 2,243,500 1,741,000 1,682,000
Software and software licenses 2,950,800 2,719,100 2,519,300 2,292,900 1,975,200 1,811,600
Customer contracts and lists 1,062,200 1,021,200 860,700 708,600 614,100 603,700
Other intangibles 239,000 239,200 237,900 236,500 228,200 207,800
Intangible assets, gross 4,252,000 3,979,500 3,617,900 3,238,000 2,817,500 2,623,100
Accumulated amortization (3,041,900) (2,763,700) (2,546,400) (2,351,600) (2,197,300) (2,088,900)
Intangible assets, net 1,210,100 1,215,800 1,071,500 886,400 620,200 534,200
Goodwill and intangible assets, net 3,548,500 3,525,200 3,394,500 3,129,900 2,361,200 2,216,200

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

Item Description The company
Goodwill Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Automatic Data Processing Inc. goodwill decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.
Intangible assets, net Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Automatic Data Processing Inc. intangible assets, net increased from 2019 to 2020 but then slightly decreased from 2020 to 2021.
Goodwill and intangible assets, net Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Automatic Data Processing Inc. goodwill and intangible assets, net increased from 2019 to 2020 and from 2020 to 2021.

Adjustments to Financial Statements: Removal of Goodwill

Automatic Data Processing Inc., adjustments to financial statements

US$ in thousands

Microsoft Excel
Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016
Adjustment to Total Assets
Total assets (as reported) 48,772,500 39,165,500 41,887,700 37,088,700 37,180,000 43,670,000
Less: Goodwill 2,338,400 2,309,400 2,323,000 2,243,500 1,741,000 1,682,000
Total assets (adjusted) 46,434,100 36,856,100 39,564,700 34,845,200 35,439,000 41,988,000
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported) 5,670,100 5,752,200 5,399,900 3,459,600 3,977,000 4,481,600
Less: Goodwill 2,338,400 2,309,400 2,323,000 2,243,500 1,741,000 1,682,000
Stockholders’ equity (adjusted) 3,331,700 3,442,800 3,076,900 1,216,100 2,236,000 2,799,600

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

Automatic Data Processing Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Automatic Data Processing Inc., adjusted financial ratios

Microsoft Excel
Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016
Total Asset Turnover
Reported total asset turnover 0.31 0.37 0.34 0.36 0.33 0.27
Adjusted total asset turnover 0.32 0.40 0.36 0.38 0.35 0.28
Financial Leverage
Reported financial leverage 8.60 6.81 7.76 10.72 9.35 9.74
Adjusted financial leverage 13.94 10.71 12.86 28.65 15.85 15.00
Return on Equity (ROE)
Reported ROE 45.83% 42.88% 42.46% 46.85% 43.59% 33.30%
Adjusted ROE 77.99% 71.64% 74.52% 133.28% 77.52% 53.31%
Return on Assets (ROA)
Reported ROA 5.33% 6.30% 5.47% 4.37% 4.66% 3.42%
Adjusted ROA 5.60% 6.69% 5.80% 4.65% 4.89% 3.55%

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Automatic Data Processing Inc. adjusted total asset turnover ratio improved from 2019 to 2020 but then deteriorated significantly from 2020 to 2021.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Automatic Data Processing Inc. adjusted financial leverage ratio decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Automatic Data Processing Inc. adjusted ROE deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Automatic Data Processing Inc. adjusted ROA improved from 2019 to 2020 but then deteriorated significantly from 2020 to 2021.

Automatic Data Processing Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Microsoft Excel
Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016
As Reported
Selected Financial Data (US$ in thousands)
Revenues 15,005,400 14,589,800 14,175,200 13,325,800 12,379,800 11,667,800
Total assets 48,772,500 39,165,500 41,887,700 37,088,700 37,180,000 43,670,000
Activity Ratio
Total asset turnover1 0.31 0.37 0.34 0.36 0.33 0.27
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Revenues 15,005,400 14,589,800 14,175,200 13,325,800 12,379,800 11,667,800
Adjusted total assets 46,434,100 36,856,100 39,564,700 34,845,200 35,439,000 41,988,000
Activity Ratio
Adjusted total asset turnover2 0.32 0.40 0.36 0.38 0.35 0.28

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

2021 Calculations

1 Total asset turnover = Revenues ÷ Total assets
= 15,005,400 ÷ 48,772,500 = 0.31

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 15,005,400 ÷ 46,434,100 = 0.32

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Automatic Data Processing Inc. adjusted total asset turnover ratio improved from 2019 to 2020 but then deteriorated significantly from 2020 to 2021.

Adjusted Financial Leverage

Microsoft Excel
Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016
As Reported
Selected Financial Data (US$ in thousands)
Total assets 48,772,500 39,165,500 41,887,700 37,088,700 37,180,000 43,670,000
Stockholders’ equity 5,670,100 5,752,200 5,399,900 3,459,600 3,977,000 4,481,600
Solvency Ratio
Financial leverage1 8.60 6.81 7.76 10.72 9.35 9.74
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted total assets 46,434,100 36,856,100 39,564,700 34,845,200 35,439,000 41,988,000
Adjusted stockholders’ equity 3,331,700 3,442,800 3,076,900 1,216,100 2,236,000 2,799,600
Solvency Ratio
Adjusted financial leverage2 13.94 10.71 12.86 28.65 15.85 15.00

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

2021 Calculations

1 Financial leverage = Total assets ÷ Stockholders’ equity
= 48,772,500 ÷ 5,670,100 = 8.60

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 46,434,100 ÷ 3,331,700 = 13.94

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Automatic Data Processing Inc. adjusted financial leverage ratio decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Adjusted Return on Equity (ROE)

Microsoft Excel
Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016
As Reported
Selected Financial Data (US$ in thousands)
Net earnings 2,598,500 2,466,500 2,292,800 1,620,800 1,733,400 1,492,500
Stockholders’ equity 5,670,100 5,752,200 5,399,900 3,459,600 3,977,000 4,481,600
Profitability Ratio
ROE1 45.83% 42.88% 42.46% 46.85% 43.59% 33.30%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net earnings 2,598,500 2,466,500 2,292,800 1,620,800 1,733,400 1,492,500
Adjusted stockholders’ equity 3,331,700 3,442,800 3,076,900 1,216,100 2,236,000 2,799,600
Profitability Ratio
Adjusted ROE2 77.99% 71.64% 74.52% 133.28% 77.52% 53.31%

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

2021 Calculations

1 ROE = 100 × Net earnings ÷ Stockholders’ equity
= 100 × 2,598,500 ÷ 5,670,100 = 45.83%

2 Adjusted ROE = 100 × Net earnings ÷ Adjusted stockholders’ equity
= 100 × 2,598,500 ÷ 3,331,700 = 77.99%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Automatic Data Processing Inc. adjusted ROE deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.

Adjusted Return on Assets (ROA)

Microsoft Excel
Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016
As Reported
Selected Financial Data (US$ in thousands)
Net earnings 2,598,500 2,466,500 2,292,800 1,620,800 1,733,400 1,492,500
Total assets 48,772,500 39,165,500 41,887,700 37,088,700 37,180,000 43,670,000
Profitability Ratio
ROA1 5.33% 6.30% 5.47% 4.37% 4.66% 3.42%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net earnings 2,598,500 2,466,500 2,292,800 1,620,800 1,733,400 1,492,500
Adjusted total assets 46,434,100 36,856,100 39,564,700 34,845,200 35,439,000 41,988,000
Profitability Ratio
Adjusted ROA2 5.60% 6.69% 5.80% 4.65% 4.89% 3.55%

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

2021 Calculations

1 ROA = 100 × Net earnings ÷ Total assets
= 100 × 2,598,500 ÷ 48,772,500 = 5.33%

2 Adjusted ROA = 100 × Net earnings ÷ Adjusted total assets
= 100 × 2,598,500 ÷ 46,434,100 = 5.60%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Automatic Data Processing Inc. adjusted ROA improved from 2019 to 2020 but then deteriorated significantly from 2020 to 2021.